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Avianca Announces New Fare Structure as Part of Ongoing Efforts to Secure Profitability
South American carrier Avianca announced a new fare structure that seeks to generate additional revenue through the sale of ancillary products. The new structure is divided into five fare groups labeled as S, M, L, XL and XXL and begins charging for seat selection along with hold luggage in the lower fare groups.
Silvia Moquera, Avianca’s Chief commercial officer, said in a press release, “With this change we focus on our clients, we understand that the traveler is the owner of their flight experience and that is why we give them all the tools to travel according to their needs.”
“The intention to change the fares model is to give the clients an additional value. We are generating a greater offer and we align with the sales and customer service trends in the world,” she added.
In this way, the new structure will see the S fare group charging for seat selection and hold luggage, the M group will include one piece of 23 kilos for hold luggage while restricting changes and refunds. Business class fares will take the names of XL and XXL, with the former being discounted business class with some change and cancellations restrictions, while the latter standing for a fully flexible business class fare.
As part of the move which seeks to generate additional revenue from ancillary services, Avianca has created a new extra legroom section within economy branded as “Avianca Plus.” The new section will come with priority boarding, an amenity kit and an upgraded blanket. Costumers purchasing full fare economy labeled as L will be able to enjoy these benefits.
Additionally, travelers will be able to purchase these seats separately. The new “Avianca Plus” product will be available on long-haul flights from Avianca’s base in Bogotá to Madrid, Barcelona, London Heathrow and Munich.
Setting Path Towards Profitability
Avianca’s CEO Anko Vander Werff, appointed in the second quarter of 2019, stepped into the role with the primary mission of bringing the airline back into profitability by 2021 from its $5 million debt.
The plan sought to reconfigure the company’s structure to optimize efficiency in its use of resources. For such, the airline has cancelled orders for 20 A320neos, instead switching commitments for 21 A321neos into the smaller A320neos, while cancelling five of the larger Airbus single-aisle variants and will receive just two A321neos out of its initial order for 28 frames.
The airline has also deferred aircraft deliveries to 2025 in order to reduce short-term financial pressures and prioritize its restructuring needs.
The Bogota-based carrier has also made significant network and capacity adjustments focusing on routes that provide better returns, while weaker routes and those that did not add much value to their overall network and hub structure.
In this way, these changes have focused on reshaping the airline’s multi-hub structure that would see it having many overlapping routes from its hubs in Bogota, Colombia, San Salvador and Lima, and instead placing emphasis on boosting its Bogota hub with more and better-timed frequencies to offer seamless connections to flyers.
Efforts to concentrate movement in Bogota has led the carrier to reduce almost 20 routes from the Lima hub, including Asuncion, Medellin, Cali, Montevideo, Porto Alegre, Cancun and Punta Cana as many were already served from Bogota or San Salvador. The only addition from the Peruvian hub is Miami with a second daily frequency to be added in April. However, with equipment changing from a single A330 departure to a twice-daily A319/A320 operation the real capacity increase is a mere seven percent.
From Bogota, Avianca has added a third daily flight to Sao Paulo and will begin operating flights to Porto Alegre, Asuncion and Montevideo previously flown from Lima.
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